Trump Cedes Global Economic Leadership to China

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On Monday, January 23th, President Trump fulfilled a campaign pledge by signing an executive order to withdraw from the Trans-Pacific Partnership (TPP), a major component of former President Barack Obama’s Asia policy. In response to this foreign policy analyst Daniel Drezner tweeted: “That sound you hear is the clinking of champagne glasses in Beijing.”

On “CBS This Morning”, John McCain lamented Trump’s decision, stating, “My concern is that we consign the Asia pacific region to China. They have now a very significant economic role, where 60 percent of the world’s economy is in the Asia-Pacific region, and we are stepping back. I have talked to leaders of Asian countries who have all said that this will cede the field to China. And that, to me, is not good for the United States of America.”

In what is now being perceived as ironic, just last week President Xi Jinping became the first Chinese President to be a keynote speaker at the World Economic Forum in Davos, Switzerland. In his speech Jinping defended international free trade while condemning protectionism. Arguing that “nobody wins a trade war” and dismissing as impossible any attempt to “cut off flows of capital, technologies, products, industries and people between economies”, Jinping may have very well came off as a champion of globalization during a time of increasing populism across the West that is wary of globalization and supports more economic protectionist measures.

In ceding economic leadership to China by creating a vacuum to fill in Asia, the United States risks dampening diplomatic relationships in East Asia. Yang Jiechi, State Councilor of the People’s Republic of China, has stated in the past a desire from China to “reform the global economic governance system through the Group of 20, Asia Pacific Economic Cooperation (APEC), the World Economic Forum in Davos and other platforms.”

Trump’s complete withdrawal from the TPP should be baffling to those who believed his rhetoric that he was a great negotiator. By giving up the biggest leverage he had with the United States biggest competitor it has in regards to trade, Trump essentially gave away something for nothing. To Trump’s credit, he has shown more promise when it comes to the North American Free Trade Agreement (NAFTA), inviting the leaders of Canada and Mexico to Washington to renegotiate a deal. A similar approach to TPP may have yielded better outcomes for the United States, addressing some of the problems with TPP I previously covered, and maintained our geopolitical credibility with East Asia without giving China an opportunity to take the mantle of global leadership.